Correlation Between Main Street and BNY Mellon
Can any of the company-specific risk be diversified away by investing in both Main Street and BNY Mellon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Main Street and BNY Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and BNY Mellon Strategic, you can compare the effects of market volatilities on Main Street and BNY Mellon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Main Street with a short position of BNY Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and BNY Mellon.
Diversification Opportunities for Main Street and BNY Mellon
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Main and BNY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and BNY Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon Strategic and Main Street is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Main Street Capital are associated (or correlated) with BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon Strategic has no effect on the direction of Main Street i.e., Main Street and BNY Mellon go up and down completely randomly.
Pair Corralation between Main Street and BNY Mellon
Given the investment horizon of 90 days Main Street Capital is expected to generate 1.35 times more return on investment than BNY Mellon. However, Main Street is 1.35 times more volatile than BNY Mellon Strategic. It trades about 0.38 of its potential returns per unit of risk. BNY Mellon Strategic is currently generating about 0.26 per unit of risk. If you would invest 5,620 in Main Street Capital on October 22, 2024 and sell it today you would earn a total of 384.00 from holding Main Street Capital or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. BNY Mellon Strategic
Performance |
| Timeline |
| Main Street Capital |
| BNY Mellon Strategic |
Main Street and BNY Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and BNY Mellon
The main advantage of trading using opposite Main Street and BNY Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, BNY Mellon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BNY Mellon will offset losses from the drop in BNY Mellon's long position.| Main Street vs. PennantPark Floating Rate | Main Street vs. Gladstone Capital | Main Street vs. Gladstone Investment | Main Street vs. Prospect Capital |
| BNY Mellon vs. Blackrock Muniholdings Closed | BNY Mellon vs. DTF Tax Free | BNY Mellon vs. John Hancock Income | BNY Mellon vs. MFS Investment Grade |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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